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Ergen: Dish Network Open to Spectrum Sale if Wireless Broadband Strategy Fails

By | October 4, 2012

      [Satellite News 10-04-12] Pay-TV satellite operator Dish Network could end up selling the 40 MHz of spectrum it inherited from its DBSD North America and Terrestar Networks acquisitions if the Federal Communications Commission (FCC) does not approve its use for the company’s planned wireless broadband platform, according to Dish Network Chairman Charlie Ergen.

         Ergen said it was possible that the company would consider such a sale when asked whether or not he might offer the spectrum to AT&T.
      “We are not suicidal,” Ergen told reporters at an Oct. 3 press conference held at the PCIA Wireless Infrastructure Association convention. “We prefer not to sell the spectrum, but our company has a responsibility to our shareholders and I am speaking as one of the largest shareholders … Getting into the mobile broadband business is going to be a tough project for us, but it’s not our first rodeo.”
         Trying to succeed where 4G LTE wholesaler LightSquared failed, Dish Network has been working with the FCC to ease restrictions on satellite spectrum use. While the FCC has loosened some restrictions, it has placed Dish Network’s request for authorization to utilize the spectrum on hold.
         Dish Network considered partnering with another company in order to more quickly move the process along, according to Ergen, who added that the merge of T-Mobile and MetroPCS has created some uncertainty in the regulatory arena.
         “It is not a surprise that there would be consolidation in the industry,” said Ergen. We hoped that we would have had our license before consolidation started to happen because that would have allowed us to participate and you certainly have more options when there are a lot more people on the table that you can potentially partner with. It is disappointing we are not yet in the game considering everything we have put on the table, but we still have a lot of options.  For example, we may not have to build our network from scratch. We could share networks, towers and infrastructure. We really hoped when we started this project that we would actually build a network from scratch, but the timing doesn’t make a lot of sense anymore.”
         The 40 Mhz of spectrum that Dish Network currently holds is not enough to become the wireless powerhouse Ergen envisioned for his company. Ergen noted that while his spectrum is ideal for densely populated areas, it is also unsuitable for rural areas.  
         “Bottom line is that we need more spectrum and the FCC has opened a proceeding to revise its approach to regulating spectrum concentration,” said Ergen. “I would be interested to see what the FCC does about spectrum caps, especially since not all spectrum is equal. The government does pick winners and losers, which keeps me up at night. Policy sometimes gets caught up in politics. A great example is LightSquared, though some of their problems were of their own making.”
         Market research shows that the United States is saturated with new broadcast and broadband offerings, but also that consumption in the wireless broadband market is doubling every year. Ergen noted that there are at least four competitors in every corner of these markets.
         “There’s the cable company, the phone company, DirecTV and us, and there’s the Internet with an unlimited number of players. It’s a very competitive market and a decent business, but a mature one,” he said. “We want to get into the business in different ways. We want to come up with a better phone and apps for how to use it. We’re certainly not as experienced or as knowledgeable or have the scale of some of the bigger players … I can’t say how long it would take to monetize Dish’s investment if the FCC gave us the green light tomorrow, but we are ready to invest billions. We have $6 billion on the balance sheet. We already invested $4 billion for the spectrum licenses.”
         Overall, Ergen said Dish Network’s wireless market strategy and investment plan resembled a new approach for the satellite pay-TV operator. “Our plan has got to be easier than a business plan of launching a satellite on a Chinese rocket that has a 50 percent success rate to compete against DirecTV. Cable companies forced us to become more competitive in broadband. They really have a great broadband product.”

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